In reading some of the posts of the last couple of days the “broken VC model” I was half expecting to encounter a guantlet of entrepreneurs on the side of i280 this morning who were deserving of venture funding and unable to get it, or a mad dash by every VC in town to fund every possible company with the words “blog”, “RSS”, “Web2″, “Wiki”, “advertising revenue model”, or “community” in the business plan… what am I thinking, in a bubble we don’t do business plans, just powerpoints and napkins.
Much to my dismay, I saw neither on my drive into the office today.
To paraphrase, I think all this talk about bubbles is premature. There really aren’t that many of these companies that have venture investors, and the ones that aren’t getting interest from VC’s are suffering from a bigger problem, nicely summed up here.
“From conversations we’ve had with VCs, many don’t like Web 2.0
companies because they have low barriers to entry, and so far there
have not been overwhelming liquidity events.”
There will no doubt be companies that achieve impressive valuation premiums for early stage rounds, but I’d wager that those valuations have as much to do with the team behind the company as anything to do with the technology or markets.
All of the postings back and forth about the VC business being broken would be better to focus on whether or not the Web 2.0 business model will result in sustainable high growth companies across a large swath of the market.